Snap-on third-quarter earnings fall to $4.64 per diluted share on tools decline

Snap-on Incorporated (SNA) said Thursday in a regulatory filing that third-quarter net earnings were $243.0 million, or $4.64 per diluted share, down from $265.4 million, or $5.02 per diluted share, a year earlier.

Net sales for the quarter ended Oct. 3 were $1,183.7 million, a decrease of $7.1 million, or 0.6%, from a year earlier.

The year-earlier quarter included a $16.2 million after-tax benefit from a legal settlement, or $0.31 per diluted share.

Here's how the company did:

• Net earnings: $243.0 million, or $4.64 per diluted share, vs. $265.4 million, or $5.02 per diluted share, a year earlier
• Net sales: $1,183.7 million vs. $1,190.8 million a year earlier
• Total revenues, including financial services: $1,282.3 million vs. $1,291.9 million a year earlier

Organic sales, a non-GAAP measure that strips out acquisitions and currency effects, fell $33.1 million, or 2.8%. Acquisitions added $25.6 million of sales, and favorable currency translation added $0.4 million.

Operating earnings before financial services were $248.1 million, or 21.0% of net sales, compared with $278.5 million, or 23.4%, a year earlier. The prior-year figure included a $22.0 million benefit from the legal settlement, or 190 basis points of margin.

Gross profit was $603.6 million, compared with $605.9 million. Operating expenses rose to $355.5 million from $327.4 million.

The effective income tax rate was 22.3%, compared with 22.6% a year earlier.

"Our third quarter was mixed with varied outcomes among our business groups," Snap-on chairman and chief executive officer Nick Pinchuk said. "The results were principally marked by the unprecedentedly accelerated rise in diesel prices, which in our mobile van channel prompted franchisees to reduce inventories despite very stable demand from their technician customers."

Pinchuk said gross margins held up despite the pressure. "But even with the challenges raised by the extreme turbulence, Snap-on Value Creation continued to support a resilience that kept gross margins strong."

The Commercial & Industrial Group had sales of $404.3 million, up from $367.7 million. That included a $27.0 million, or 7.4%, organic gain and $10.0 million of acquisition-related sales. Its operating earnings rose to $74.7 million from $57.5 million, and its operating margin was 18.5%, compared with 15.6%.

The Snap-on Tools Group's sales fell to $471.5 million from $506.0 million, a $35.7 million, or 7.0%, organic decline. The company said the drop reflected lower sales both in the U.S. and in the segment's international operations.

The Tools Group's operating earnings were $84.8 million, compared with $109.9 million, and its operating margin was 18.0%, down from 21.7%.

The Repair Systems & Information Group had sales of $454.7 million, down from $464.8 million. An organic decline of $25.7 million, or 5.5%, was partly offset by $15.6 million of acquisition-related sales. The organic decrease was primarily due to reduced activity with OEM dealerships.

Operating earnings for the group were $116.1 million, compared with $141.2 million, a year earlier that included a $22.0 million benefit from the legal settlement. The operating margin was 25.5%, compared with 30.4%, which included a 480 basis point benefit from the settlement.

Financial Services posted operating earnings of $68.3 million on revenue of $98.6 million, compared with $68.9 million on $101.1 million a year earlier. Originations were $270.6 million, a decrease of $3.5 million, or 1.3%. Corporate expenses were $27.5 million, down from $30.1 million.

For the first nine months, net sales were $3,626.0 million, compared with $3,511.3 million. Diluted earnings per share were $14.30, compared with $14.24, and net earnings attributable to Snap-on Incorporated were $750.6 million, down from $756.2 million.

Operating cash flow for the first nine months was $887.9 million, compared with $813.6 million a year earlier. The company paid $379.3 million in cash dividends and bought $278.4 million of treasury stock, compared with $335.5 million and $248.2 million.

The company spent $158.4 million on acquisitions of businesses, net of cash acquired, in the first nine months.

Snap-on expects capital expenditures in 2026 to approximate $100 million, of which $69.0 million was incurred in the first nine months. It currently anticipates a full-year 2026 effective income tax rate of approximately 22%. The release did not include a full-year sales or earnings forecast.